Proving fraud is a tricky business

By Ivan Israelstam, chief executive of Labour Law Management Consulting

Workplace fraud, by its nature, is a secretive act. It is a type of dishonesty that is normally committed in such a way that its very existence is concealed.

In order to prove fraud the employer must show that the accused employee was the one who committed the act and that they did so for gain. The fraud could be committed for the advantage of a friend or family member or could be a means towards gaining the perpetrator a job.

The employer’s strategy for combating employee fraud needs to be based on two broad approaches, namely, prevention and reaction. Prevention involves the principle of trusting nobody and the implementation of comprehensive safeguards including measures such as video cameras, authority levels and auditing procedures amongst others.

Reaction involves taking seriously all reports or hints of irregularities, swift action and, above all, building a cast iron case against the accused. Failure to do so properly can result in the dismissed employee being reinstated simply because the employer failed to prove the employee’s guilt at the CCMA or bargaining council.

In the case of NUMSA obo Thosane S vs Rope Constructions Co. (Pty) Ltd (17 Oct 2005MEGA 8343, LIS) Thosane was dismissed for clock card fraud. It was established that, despite his Thosane’s confirmed absence, his time card had been clocked out. He was therefore dismissed for absence without leave and for clock card fraud. At the arbitration hearing Thosane neither denied that he had been absent nor that someone else had clocked his card. However, he denied that he had been involved in the clocking of his card.

This denial together with the fact that the employer had no direct proof that Thosane had arranged the clocking of his card worked in the employee’s favour. While the employer may have been defrauded by whoever clocked Thosane’s card the arbitrator found that there was insufficient evidence that Thosane himself had intended to commit fraud. The arbitrator therefore ordered the employer to reinstate the employee.

In labour law verdicts are to be decided on the balance of probabilities. It appears improbable that a colleague of Thosane would have clocked his card without being asked to do so by Thosane. However, if the employer had wished to incriminate Thosane as a means of getting rid of him, one of the managers, on having noticed Thosane’s absence at clock out time, could have clocked his card to make it look as if he had committed fraud.

Had the employer via a witness or video camera caught a colleague of Thosane clocking his card the employer may have been able to obtain a statement from that colleague to the effect that Thosane had asked him to clock his card. Alternatively, had the rules required employees to keep their clock cards in a locker it would have been easier to show that the person who did the clocking obtained the card from Thosane.

Employers need to understand that legally, where they wish to infer that an employee committed fraud, they must at least be able to show that nobody else could have committed the fraud without he accused’s involvement. This illustrates the urgent need for employers to make improvements to their security arrangements, disciplinary procedures and labour law expertise.

To register for our 7 May webinar on Lockdown Labour Law please contact Ronni on ronni@labourlawadvice.co.za or 0845217492.

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